flEE RESTRICTED FzLEc xwY COPYE Report NO. TO(IDA)7c This report was prepared for use within the Association. It may not be pub- lished nor may it be quoted as representing the Association's views. The Association accepts no responsibility for the accuracy or completeness of the contents of the report. INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF THE TAIPEI REGIONAL WATER SUPPLY PROJECT THE REPUBLIC OF CHINA August 28, 1961 Department of Technical Operations EFFECTIVE CURRENCY EQUIVALENTS US$1. 00 = NT$40. 00 NT$1. 00 = US$0. 025 NT$1, 000, 000 = US$25,000 ABBREVIATIONS CM = cubic meters CMD = cubic meters per day lpcd = liters per capita per day psi = pounds per square inch km = kilometers mm = millimeters APPRAISAL OF THE TAIPEI REGIONAL WATER SUPPLY PROJECT THE REPUBLIC OF CHINA Table of Contents Paragraphs SUMMARY AND CONCLUSIONS . . . . . . . . . . . . . i - ix I. INTRODUCTION . . . . . . . . . . . . . . . . . . 1 - 2 II. THE BORROWER . . . . . . . . . . . . . . . . . . 3 - 30 General . . . . . . . . . . . . . . . . 3 - 7 Present Facilities . . . . . .. ... 8 - 15 Finance . . . . . . . . . . . . . . . . . . . * 16 - 24 Present Demand . . . . . . . . . . . . . 25 - 29 Summary . . . . . . . . . . . . . . . 0 . . . 30 III. EXPECTED DEMANDS FOR WATER . . . . . . . . . . . 31 - 42 1970 Demand . . . . . . . . . . . . . . . . . . 31 - 38 Water Rates . . . . . . . . . . . . . . . . . . 39 - 42 IV. THE PROJECT . . . . . . . . . . . . . . . . . . . 43 - 54 General . . . . . . . . . . . . . . . . . 43 - 50 Procurement . . . . . . . . . . . . . 51 Investment Cost Estimate . . . . . . . . . . . 52 - 54 V. FINANCING PLAN AND PROJECTIONS . . . . . . . 55 - 60 VI. ECONOMIC JUSTIFICATION . . . . . . . . . . . . . 61 - 65 VII. CONCLUSIONS AND RECOMMENDATIONS . . . . . . . . . 66 - 69 ANNEXES 1 - Taipei Water Works Organization 2 - Taipei Regional Water Supply Commission Organization 3 - Taipei Water Works Balance Sheets, 1957 - present 4 - Taipei Water Works Income Statements, 1957 - 1960 5 - Taipei Water Works Capital Expenditures, 1953 - 1960 6 - City of Taipei Water Usage Statistics, 1946 - 1960 7 - Taipei Water Works - Present Rate Structure 8 - Taipei Regional Water Supply Project Description - Original and Final 9 - Taipei Regional Water Supply Project Construction Schedule 10 - Taipei Regional Water Supply Project Cost Comparison - Original and Final 11 - Taipei Water Works Pro Forma Profit and Loss Statements, 1960-1970 12 - Taipei Water Works Pro Forma Balance Sheets, 1960-1970 13 - Taipei Water Works Pro Forma Cash Flow Statement, 1961-1970 14 - Incidence of Water-borne Disease, Taipei, Taiwan, 1947-1960 MAPS 1 - Taipei Water Supply System - Existing 2 - Taipei Water Supply System - Revised and Original Projects APPRAISAL OF THE TAIPEI REGIONAL WATER SUPPLY PROJECT THE REPUBLIC OF CHINA SUMMARY AND CONCLUSIONS i. The Government of The Republic of China has requested a develop- ment credit from the International Development Association for $4.4 million to cover part of the cost of a substantial extension of the water supply system in Taipei and eight surrounding communities. The Chinese Government would relend the funds to the Taipei Water Works which has been established to provide water service in the entire area (Paragraphs 1-7). ii. The present water systems in the area have a total capacity of approximately 180,000 CMD, and are in good condition. The Taipei Water Works charges rates which are adequate to cover all of its costs of operation and the normal recurring costs of minor extensions and expansions. The prelimi- nary expenses associated with the proposed large expansion program, however, have put it in a marginal financial position (Paragraphs 8-24). iii. Public water is currently supplied in Taipei City itself and two suburbs. Demand in these communities is greater than supply; this is evi- denced by low water pressure. Water usage is not low, however, and in Taipei gross water production amounts to about 230 liters per day for each person served with public water. The population of the other suburbs is dependent upon private wells, streams and canals for its water (Paragraphs 25-30). iv. The peak demand for public water for the entire area for the year 1970 is estimated to be 358,000 CMD, or about double present production. Availability of this quantity of water would be expected to satisfy current demand in excess of supply for the area now served, the demand in the sur- rounding communities to be provided with water service, and the increases in demand which will occur over future years due to an increased population and standard of living (Paragraphs 31-38). v. Water rates now charged and to be charged in the future should provide for revenues which are sufficient to cover all operating expenses, interest on and amortization of loans and provide funds for normal extension expenditures and a portion of major expansion costs in the future (Paragraphs 39-42). vi. The proposed project provides for a raw river water pumping station, a raw water pipeline, a new filtration plant with an estimated capacity of 200,000 CMD, two reservoirs, a substantial expansion of the distribution system and three or four deep wells to provide increased water in the near future and water to meet peak demand later. The total cost of the project, including interest during construction, is estimated at NT$458 million or about US$11.5 million equivalent (Paragraphs 43-54). - ii - vii. The proposed IDA financing accounts for about 38% of the total project. The Government of The Republic of China will arrange for a loan for about 41% of the project from counterpart funds, or will provide other satisfactory financing. The balance of the project cost represents deferred interest during construction which will be due to the Government (8%) and the investment to be provided out of Water Works revenues (13%) (Paragraphs 55-60). viii. The project is necessary in order to meet the needs of the present and future population of the Taipei region. If it is not carried out, the prospect is that in spite of continued emergency measures, the supply of water per head of the population will decline, thus lowering the standard of living (Paragraphs 61-65). ix. The project provides a suitable basis for an IDA development credit of US$4.4 million to The Republic of China free of interest for 50 years, with no repayments during the first 10 years and repayments of 1% of princi- pal each of the next 10 years and 3% of principal each year for the last 30 years. There would be a service charge of 3/4% per year on the amount out- standing. The Republic of China plans to make the equivalent of these funds available to the Taipei Water Works for a total of 23 years, including a three-year grace period, at an interest rate of 12% with interest and prin- cipal repayable in local currency in equal payments. The contractual arrange- ments which must be satisfactory to IDA will require the Taipei Water Works to charge adequate rates, to motivate prompt payment of accounts and not to incur excessive future debt. The Government of China has agreed that it will arrange satisfactory financing for local currency expenditures. These terms would be appropriate to the circumstances of the project (Paragraphs 66-69). I. INTRODUCTION 1. The Government of The Republic of China has requested a development credit from the International Development Association to cover a substantial extension of the water supply and distribution systems in the capital city of Taipei and the surrounding area. The proposed credit would be used for expenditures for necessary machinery and equipment and piping. Funds required for other material expenditures and local construction costs would be covered by a loan of counterpart funds or by Chinese government sources and by funds generated by the Taipei Water Works. 2. This appraisal of the project is based on information submitted by the borrower and on a field investigation carried out by the Association's staff and an independent consultant in February and March 1961. II. THE BORROWER 3. The Borrower would be The Republic of China which would relend the funds to the Taipei Water Works which has been established as a legal entity under the jurisdiction of the Taipei City Municipal Council. 4. The Taipei Water Works has been established as an agency to provide water supply in the Taipei area. It is taking over the existing water supply, treatment and distribution systems in the area now owned by the Taipei Municipal Water Works (an agency under the supervision of the Taipei Municipal Government) and the Shih-Lin Water Works (an agency currently under the supervision of the Shih-Lin Town Government). In addition to these communities, its area of responsibility would cover other suburbs, Tien-Mu, Mu-Shan, San-Chung, Chung-Ho and Yung-Ho, Hsin-Tien and Taing Mei. Map 1 shows the general area and the location of these suburbs. 5. The Taipei Water Works has been established as a legal entity under the Industry and Mine Mortgage Law. The organization of the current Taipei Municipal Water Works is shown in Annex 1. 6. The planning of the proposed project has been carried out by the Taipei Regional Water Supply Commission (TR"SC), an agency formed by and under the jurisdiction of the Taiwan Provincial Governmont to plan and engineer the project, since the area to be served covers several political units. The TRWSC also will act as project construction manager. Its organization is shown in Annex 2. - 2 - 7. The TRWSC staff has been drawn mainly from the staff of the existing Taipei Water Works and from various Taiwan Provincial Government agencies. It should be capable of carrying out the project design and construction. At the end of the construction period, the TRWSC will be dissolved and an expanded Taipei Water Works organization will be staffed to the extent necessary by TRWSC personnel. Management of the Taipei Water Works has been strengthened in the last year and steps are being taken to bolster it further in the near future. Considering this and the melding of the two organizations upon the conclusion of the project, it should be capable of operating the future system efficiently. Present Facilities 8. The present water production and distribution facilities in the Taipei region are composed of those systems serving the three municipalities as noted in paragraph 4; these systems are shown on Map 1. 9. Water is currently obtained from the following sources and treatment plants: Estimated Source Treatment Caracity Present Taipei System (CMD) 1. Hsin-tien-chi Plant filtration & chlorination 66,000 2. Yan-ming-shan-Springs chlorination only 28,000 3. Shuang-chi Plant filtration & chlorination 18,000 4. 26 Deep Wells chlorination only 66,000 Present Shih-Lin System Yang-ming-shan-Springs chlorination only 2,500 Grand Total 180,500 10. Present water supply and treatment facilities are in good condition with minor exceptions; the facilities have estimated remaining service lives of at least 25 years. The main treatment plant at Hsin-tien-chi is composed of a slow sand filtration plant built in 1908 and a rapid sand filtration plant built in 1952; there is some piping in the plant area which will need replacement in coming years and some minor modifications will be needed to improve plant operations. The river water pumping station for this plant, however, is not advantageously located; water supply to the plant is limited at low river water levels. 11. The Yang-Ming-Shan spring facilities are up to 30 years old. The water treatment plant at Shuang-chi is seven years old and is in good condition. The 26 deep wells are all equipped with motors and pumps less than four years old. All the wells except two have been drilled in the last four years. Unfortunately, data on ground water levels are not available and the reliability of this water source is not known. 12. The present Taipei distribution system is composed of approximately 370 km. of various types of piping varying in diameter between 75 and 750 mm; of this, less than 50 km. is 300 mm. in diameter or larger and could be considered as adequate trunk distribution main. In 1960, pressure in the system was low averaging about 11 psi and varying between a pressure averaging 13 psi in months of low demand and nine psi in months of high demand. 13. Leakage and unaccounted-for losses in the system are a definite problem and amount to about 40% of all water supplied to the system. The Taipei Water Works had believed that this was primarily leakage and about two years ago initiated a program to reduce this to a more reasonable figure. About one-third of the system has been surveyed to date and leakage has been reduced about 4%. 14. After investigating the present operations of the Water Works, the mission believes that a major portion of the unaccounted-for water loss is due to poor water meters. Although the Taipei system is almost completely metered, the water meters are made locally and are not of satisfactory quality. The mission impressed this on the Water Works management and steps are being taken either to obtain improved meters locally or to import good meters from abroad. 15. There is one other associated factor which must be considered, the method by which water is disposed of after use. At the present time, Taipei has no sewer system. Waste water normally drains from houses direct to the storm drainage system of open or semi-covered ditches. Buildings which have flush toilets drain through septic tanks to the same ditches. Night soil is collected by the municipality from those buildings without flush toilets (the great majority) and either disposed of or used for fertilizer. The added water to be supplied by this project is small in comparison with the drainage capacity needed for storm drainage and should not tax the system except in periods of high rainfall when the current system is inadequate in any event. Finance 16. Financial statements of the Taipei Water Works are shown in Annexes 3 and 4. The financial resources of the Shih-Lin water works system are not significant. 17. The Taipei Water Works was in a barely satisfactory financial position as at December 31, 1960; although it had little long-term debt, the balance sheet position was marginal. The current assets to current liabilities ratio was 1.1. Cash was low due to demands on the Water Works for preliminary engineering and planning for the proposed project, many of the current assets were tied up in slow moving inventory and the collectability of the accounts receivable was questionable; about NT$900,000 or 30% of the accounts receivable were more than six months overdue. By the end of February 1961, the cash position had been reduced still more. Inventories had been increased further and accounts receivable had risen over 50% reflecting a buildup since December 31 when many accounts had been brought up-to-date at the end of the year. Accounts in arrears more than six months had risen to a level of about NT$1,300,000. 18. As reflected in the foregoing, Water Works' management control over accounts receivable and inventories has not been satisfactory. The mission initiated action to improve this, detailing certain reports, procedures and accounting system changes which would provide adequate timely information to management for better control. Improvements since that time have been substantial. Inventories have been reduced about 20% and accounts receivable have been reduced about 30%. This has allowed the Water Works to pay off a substantial portion of a short-term Bank loan, on which 121a interest is charged. 19. Perhaps the only way to motivate consumers to pay their water bills on time is to grant a discount for timely payment or collect a penalty for late payment. The mission's proposal to initiate a penalty for late payment (a disco:nt from present rates would reduce revenue and raising the rates prior to project initiation to compensate for the discount was believed to be difficult politically) was accepted by Water Works Management. 20. Property valuation as shown in the balance sheets reflects an appraisal in 1958 when fixed assets were revalued to reflect replacement cost less Japreciation. Surplus was generated in the balance sheet by this adjustir-ent -and is so noted. Since that time the wholesale price index has risen from 143 to about 185 at the end of January 1961 (1953 = 100). Assets currently are understated, but will be revalued in accordance with this index when rates are adjusted in the future. Depreciation is now being taken at an average annual rate of about 2-% on the existing assets (1958 evaluation); this amount of depreciation would amount to about 2% on the assets if valued at 1961 levels which is adequate considering the long service lives associated with Water Works facilities (40 - 100 years). 21. The Water Works has not incurred a deficit in the last ten years, and during this time profits and cash generation from depreciation have been reinvested in facilities. Earnings have been reasonable since April 1959 when water rates were increased in anticipation of the proposed expansion program. Even so, current cash generation is barely sufficient for normal annual facility and equipment expenditures and for the Water Works contribution to the proposed project. 22. It should be noted that revenues from other activities -- water meter rental fees, service connection design, installation and repair charges, etc. -- have not covered the expenses associated with these activities in three out of the last four years. This is mainly due to the fact that rental fees from water meters are insufficient to cover the cost of repair and replacement. To eliminate this deficit, the Water Works has agreed to increase water meter rental fees so that revenues would at least equal costs. 23. Since 1953, the Water Works has invested a total of about NT$85 million in the existing water source and treatment facilities and distribution system (see Annex 5). Approximately NT$62 million was provided from retained earnings and depreciation allowances; about NT$16 million was contributed by the city of Taipei and about NT$7 million was borrowed from counterpart funds and has not yet been repaid. 24. This investment program has been reasonably aggressive. New investment in facilities has usually averaged 5-10% of net assets each year. Present Demand 25. At the present time the Taipei water system serves Taipei and a portion of Tien-Mu, a suburb; Shih-Lin, another suburb, has its own water system, and there is a small private water system which serves a part of Mu-Shan. The other five suburbs which will be included in this regional development proposal, San-Chung, Chung-Ho, Yung-Ho, Hsin-Tien and Tsing- Mei, have no water supply systems at all. Water is obtained in these communities from shallow wells, streams, and canals with some industrial and governmental installations using deep wells. As evidenced by the low water pressure in Taipei City and the number of suburbs in the Taipei region either not served or served in a limited manner, public water availability in the Taipei area is inadequate to meet demand. Emergency measures have been taken during the last several years (by drilling wells in the city) in an attempt to meet the peak demand in the summer season. However, pressure in the distribution system has fallen during the summer to a dangerous point, at which there is some risk of contamination by seepage into the distribution pipes. 26. Historical water production and consumption data for the city of Taipei is shown in Annex 6. For Taipei and the Taipei region, the following data are estimated for the 1960 calendar year; population figures are based on registered data and exclude military and any other people who may not be registered: -6- Taipei Taipei Region Total Population ('000s) 899 1,088 Estimated Population Served ('000s) 776 796 % Population Served 86% 73% Service Connections (000s) 77 78 Water Production - CMD 'OOs 178 181 Water Consumption Metered - CMD '000s 108 110 Usage per capita served - lped Gross Production 230 225 Metered Consumption 139 138 Usage per capita - Total - lped Gross Production 198 166 Metered Consumption 120 101 Usage per connection - CMD Gross Production 2.3 2.3 Metered Consumption 1.4 1.4 27. In the Taipei region, approximately 796,000 people have public water service, or about 73% of the total. In Taipei itself, about 86% of the people have public water service, but only 20,000 (11%) out of a total of 189,000 of the people in the suburbs are served. 28. Consumption of water in Taipei by type of user and derivation of revenues is estimated as follows for the year 1960: Taipei City Daily Annual Annual Average Water Usage Water Usage Revenue Revenue (CYD '000s) (CM '000s) (NT$'000s) (NT$CMT Domestic 81 29,564 28,422 0.96 Commercial 8 3,107 6,291 2.02 Industrial 1 170 427 2.51 Governmental 16 6,021 6,590 1.09 Others 2 653 1,213 1.86 Total 108 39,515 42,943 1.09 Unaccounted for 70 25753- Grand Total 178 5268 42t943 Taipei is not a heavy industrial city - public water usage by industry is negligible. 29. The present rate structure is shown in Annex 7. Industrial water use is inhibited purposely by the Water Works, which in the past has requested industry to develop its own water resources because of the inadequacy of the system to meet domestic demand. The high industrial water rate, which has been justified on the concept that industry makes profits and can therefore afford to pay more, emphasizes this position. -7- S_Ummary 30. The present water supply and distribution system is inadequate on two counts. First, it cannot meet the present connected demand -- this is evidenced by low water pressure. Second, it serves only 73% of the population in the service area. III. EXPECTED DEMANDS FOR WATER 1970 Demand 31. Estimates of water demand in the Taipei region have been made by the Taipei Regional Water Supply Commission for the year 1970. When considering an expansion of a water works, it is normal to design to meet demand 10-25 years in the future; the shortage of capital and high interest rates prevalent in Taiwan justifies the shorter period. The estimate of future usage, as compared with 1960, is as follows: Taipei Region 1960 1970 1970 Average Average Peak Total Population 1,088,000 1,367,000 Estimated Population Served 796,000 1,193,000 % Population Served 73% 87% Water System Production - CMD 181,000 295,000 358,000 Water Consumption Metered - CMD 110,000 195,000 236,000 Usage per capita served - lpcd Gross Production 225 245 300 Metered Consumption 138 163 198 Usage per capita - Total - 1pcd Gross Production 166 216 262 Metered Consumption 101 142 173 32. Average current usage, under somewhat restricted conditions, is 225 lped; an increase to 245 lpcd is reasonable. Total population growth for the region is indicated per this estimate at less than 2% per year, definitely conservative considering that actual growth in the last 10- years has been near 6% compounded. The projected increase of 50% in population served, or an average of a little over 4% per year, is also reasonable. The Taipei Water Works has estimated roughly that its population served has increased at 4-5% in the last four years. It should be noted that the 1970 estimate indicates that unaccounted-for usage will still be very high, about 34% of water production. As mentioned in paragraphs 13 and 14, it is believed that much of this water is not lost but is merely not registered on the water meters. To the extent that meters are improved, this apparent loss will be reduced. Actual usage, however, will not be affected. 33. It is likely that population growth will be at a rate faster than 2%; the Economic Report estimates that population will expand at the rate of at least 3% for the island as a whole; city growth might well be faster. This is not critical to project planning, however. If demand develops in such a way that estimated production requirements reach planned levels earlier than 1970, a second stage expansion can be imple- mented by that time. 34. To facilitate the expansion of population served, the mission suggested and the Regional Water Supply Commission accepted a proposal that a fund be set up to allow installment payments for financing service connections. Consumers, when requesting water service, currently pay in advance for laying the pipe from the service main to the house and for the inside piping. The cost of this is estimated to be usually at least NT$1,200, or more than a month's wages for an unskilled laborer. This financial burden would probably inhibit connections, since many people would not have this amount of cash resources. Personal loans from other sources are difficult to obtain, and the interest on them is very high (3% per month or higher). Considering these factors, the mission suggested that the Water Vorks establish a revolving fund for financing service connections, allowing consumers to pay for service connections over perhaps a three-year period. The fund might be established with either a counterpart or a Taiwan bank loan or with self-provided funds (if generated in excess of project requirements). Interest would, of course, be charged at a rate slightly higher than that paid by the Water Works, perhaps 13-15% per year, definitely much lower than the normal personal loan rate. This proposal should accelerate service connections and demand build-up. 35. Detailing current and estimated future demand by consumer type, the Regional Water Supply Commission has made the following estimate: 1960 - Taipei City 1970 - Taipei Region Average Per Capita Average Per Capita Demand Served Usage Demand Served Usage (CND)d (lpcd) W/ (CMD) (lpcd) Domestic 80,700 104 128,000 107 Commercial 8,500 11 ) Industrial 500 1 ) 36,000 30 Governmental 16,400 21 29,000 24 Other 1,800 2 2,000 2 Unaccounted for 70.400 _1 1001000 _84 Total 178,300 2Q0 295,000 2J) a/ not including approximately 2,500 CMD now distributed by a suburban system or approximately 20,000 people served in the system. - 9 - 36. The distribution of water demand among users poses some questions. The Regional Water Supply Commission estimate of commercial-industrial demand quadrupling and government demand almost doubling in the next ten years is optimistic. At the same time, domestic water use, now under some- what restricted supply, is not estimated to increase significantly on a per capita basis. Balancing these two factors, the total demand estimate seems reasonable. 37. Geographically, the Regional Water Supply Commission estimates that demand in 1970 will be split among the various municipalities as follows: Est. Average Water Demand Per Population Capita Total Municipality Usage Served lpcd_ CMD Taipei Industrial & residential 986,000 270 264,000 San Chung Industrial & residential 78,800 180 14,000 Chung-Ho & Yung-Ho Industrial & residential 40,300 160 6,000 Shih-Lin Residential 27,200 140 4,000 Hsin-Tien Residential 24,000 120 3,000 Tsin-Mei Residential 14,700 120 2,000 Mu-Shan Residential 14,800 100 1,000 Tien-Mu Residential 7,200 200 1,000 Total Average Day 1,193,000 245 295,000 Total - Peak Day 300 358,000 38. In 1970, per capita water usage in the suburbs is estimated to be substantially lower than in the city of Taipei by the Regional Water Supply Commission. This is the reason behind the small increase in per capita demand for domestic use in Paragragh 32. However, there is a reasonable possibility of suburban demand being greater than that estimated, and this has been taken into account, on the suggestion of the mission, by an agreed increase in design size for main suburban trunk distribution lines to insure adequate piping to handle increased demand if it should develop. Water Rates 39. One important factor affecting future demand is the rate charged for water. The present average price in Taipei is about NT$1.10 per cubic meter. This rate will have to be raised to perhaps NT$2.00 (depending on water sales volume) to insure adequate generation of funds to provide for operating costs, debt service, normal extension expenditures and a portion of major expansion costs to be self-provided in the future. A rate as high as this may reduce the amount of water consumed by some customers. It is believed that the risk of a substantial reduction in demand due to the price increase is more than balanced by conservative estimates on population growth. - 10 - 40. Although forecasting demand is difficult considering possible errors in estimated population growth, population served, per capita water usage and the effect of rate changes on demand, there is one comforting factor in this project; the estimates have been made for a relatively short period ahead. If the estimates of demand prove to be too conservative, water supply will have to be expanded in a second stage before 1970 -- perhaps 1967-1969. Nothing will be lost in this event, since the project is designed to be an economic unit in itself and also to be a part of the longer range plan. 41. If on the other hand, demand is inhibited by the higher water price and does not materialize as quickly as projected, more time will elapse before the plan is fully utilized, and expansion will be postponed until sometime after 1970. The project as planned could not be changed to significantly reduce cost to meet a lower immediate demand and still be acceptable as a part of a longer range program. 42. It will be remembered from Paragraph 29 that the present rate structure includes much higher charges for "industrial" water use than for domestic or normal commercial use. This rate structure, although perhaps justified in the past by the Water Works' desire to inhibit industrial water use, is not believed to be desirable for the future. First, adequate water will be available and there will be no reason to continue to inhibit use. Second, industrial use should be encouraged to increase sales and thereby reduce water rates for everyone. Third, enforcing such a two-rate system is exceedingly difficult. The criterion used to distinguish commercial-industrial use from domestic-commercial use is whether water is used as a raw material. A barbershop pays the higher rate while a grocery store pays the lower rate. Actually the number of higher rate customers has been reduced steadily over the last few years, as individuals have been able to negotiate themselves from one classification to another. Fourth, the two-rate system causes a duplication of service connections -- frequently the family lives in the same establishment where the business is located and in these cases, there are frequently two connections and meters, one theoretically for the family and the other theoretically for the business. Considering these points, the mission recommended and the Water Works accepted a proposal that the two-rate system be abolished when water rates were adjusted upon project completion. - 11 - IV. THE PROJECT 43. The project is designed to (1) remedy the public water shortage now prevalent in the area served, (2) provide capacity to meet the demand in the additional area to be served, (3) provide capacity to meet increasing demand due to expected future population growth and a higher standard of living over the next nine years and (4) provide for economic expansion later. In developing the project plan, consideration has been given to the scarcity of capital in Taiwan and only those facilities needed in the reasonably near future are included in the project. 44. The project, as presented to IDA originally, was planned in concept in 1958. Certain developments since that time prompted the IDA mission to initiate revisions in concept and, in addition, the project was modified to assure that only vital elements were included now and that future expansion could be accommodated economically. 45. The project includes the construction of a raw water pumping station, a raw water pipeline, a water filtration and treatment plant and service building, reservoirs, trunk and service mains in the city of Taipei and eight suburban communities and three or four deep wells. After the project, the water supply and treatment system, including the older plant which will continue to operate, is expected to have a capacity of approximately 380,500 CMD, an increase of 200,000 CMD over the present capacity of 180,500 CMD. The project may be economically extended in two steps to a total capacity of 580,000 CMD if and when required. A comparison of the project originally presented to IDA and that finally agreed upon is shown in Annex 8. Map II shows the locations of the various municipalities and the location of present and proposed water facilities and distribution system for both the original and revised project. 46. Water will be drawn from the Hsin-Tien River by three raw water pumps with a total capacity of approximately 350,000 CTVD. It will be pumped through a new reinforced concrete 1,400 mm. water supply pipeline 2.4 km. long and will supply both the old and the proposed filtration plants. The existing pumping station suction well is too high to provide adequate withdrawal during the dry season, necessitating the construction of a temporary dam across the river each year; this will no longer be necessary after the new pumping station is built. - 12 - 47. At the new filtration plant, which will be located about 24 km. from the older one, water will be mixed with clarifying chemicals and allowed to settle, then filtered in rapid sand filters, chlorinated for purification and neutralized with lime as necessary to reduce corrosiveness. The plant will be designed for 200,000 CMD of water. At the suggestion of the IDA mission, design of settling tanks and filters will be based on higher settling and filtration rates than has been the standard. This decision was made in view of substantial progress in recent years in operating such facilities at higher rates, making possible a reduction in facilities needed. 48. In the Taipei region, the present water distribution system will be supplemented with about 45 km. of 300-1,000 mm. diameter trunk distribution mains. The Taipei service system will be supplemented with about 86 km. of 100-200 mm. diameter service mains. In the suburban areas, about 91 km. of 80-350 mm. diameter pipe will be laid for service. All piping will be cast iron. Additional deep wells will be drilled to provide increased water in'the near future and water to meet peak demand later. 49. With sufficient water supply, pressure in the system will be raised to about 30 psi in Taipei City, even at times of maximum consumption. This will allow multi-story buildings to have water on floors above ground level without booster pumps. Pressure in some of the suburbs is expected to be somewhat less, about 20 psi at the end of the system at some of the higher elevations. 50. The major planning and design work on the project has been done by the Water Supply Commission and Taipei Water Works personnel and was reviewed by the J. G. White Engineering Company of New York. The Water Supply Commission is now revising the engineering plans in line with the revised project. Bids for equipment are being called as specifications are drawn up, and deliveries of imported material will start in the last half of 1961; major construction will also be started at that time. The Chinese Government has arranged for interim financing and standard IDA procurement procedures are being followed to allow reimbursement from the IDA development credit if it is approved. Based on the schedule as shown in Annex 9, the water plant should be in operation at the end of 1963 and the project should be completed by July 1964. Procurement 51. Goods to be financed out of the proceeds of the Credit funds will be procured on the basis of international competitive bidding and technically competent companies within Taiwan will be allowed to compete in such bidding for the supply of distribution piping and equipment. Contracts for construc- tion and other equipment and supplies available in Taiwan to be financed with otaBr resources of the Taipei Water Works will be placed with local firms on the basis of competitive bidding whenever possible. - 13 - Investment Cost Estimate 52. The total cost of the project is estimated at NT3458 million (US$11.4 million equivalent) including interest during construction as shown below: Maximum Foreign Exchange Local Expenditures Currency Total US$ NT$ equiv. NT$ NT$ '000s - - - - - millions - - - - - - Raw water pumping station and pipeline 165 6.6 25.5 32.1 Filtration and treatment plant 619 24.8 56.0 80.8 Transmission and distribution system 3,072 122.9 77.8 200.7 Reservoirs 136 5.4 24.8 30.2 Deep wells 30 1.2 1.8 3.0 Contingencies and other 322 12.9 37.6 50.5 Sub-total 4,344 173.8 223.5 397.3 Interest during construction (12%) - - 60.7 60.7 Grand total 21.8 a____ 458.0 Interest during construction covers interest on both the counterpart fund loan and the loan of the proceeds of the IDA credit. 53. The total cost of the project as originally submitted and on the same cost estimating basis would have been approximately NT$550 million. A comparison of the projects is shown in Annex 10. 54. The cost estimates were based on detailed estimates for the origi- nal project made in mid-1960 brought up-to-date according to the approximate increase in construction costs since that time and modified on a preliminary basis to conform to the revised project. These estimates will be revised as soon as engineering for the revised project has been completed. Adequate contingencies of approximately 8% for imported items and 20% for local pro- curement and construction contracts have been included. - 14 - V. FINANCING PLAN AND PROJECTIONS 55. The project is proposed to be financed as follows: Foreign Exchange Local Total NT$ Currency NT$ % of US$ Equiv. NT$ US$ Equiv. Total - - - - - - - - - - 1000s - - - - - - - - Chinese Government (proceeds of IDA credit) 4,344 173,800 - 4,344 173,800 38% Chinese Government - interest during con- struction on IDA credit - - 36,100 - 36,100 8% Counterpart Funds Loan - - 187,100 - 187,100 41% Self-generated funds - - 61,000 - 61,000 13% 4,344 173,800 284,200 4,344 458,000 100% 56. The loan made from the proceeds of the IDA credit and the counter- part loan cover approximately 79% of the project cost. The expected counter- part loan will require interest at the rate of 12% and will be for approxi- mately 20 years. Interest during construction will be capitalized for these loans. Water Works' self-generated funds amount to 13% of the total invest- ment. This should not result in too high a debt/equity ratio since the Water Works has made other investments continually in past years and the total equity in the enterprise is about NT$300 million. 57. Working capital requirements will increase as volume increases over the years. These will be provided from the Water Works' own profits. 58. Pro forma profit and loss statements are provided in Annex 11. Assumptions as to sales are noted and believed to be conservative for 1962- 1963, reasonable for the period 1964-1966 and conservative for 1967-1970. Estimated rates, based on the assumed sales volumes, were determined by the agreed-upon basic formulae. For 1965 and forward, return on total capital invested is about 9%. 59. Pro forma balance sheets are shown in Annex 12. The Taipei Water Works is projected to be in a good financial condition with current assets/ current liabilities ratio over 1.9 and a maximum debt/equity ratio of 53:47 in the future. 60. A cash flow statement is included as Annex 13. Debt service ratios for 1965 forward are at least 1.7 and are adequate. - 15 - VI. ECONOMIC JUSTIFICATION 61. In spite of emergency measures to increase the supply of water during the last several years, it has not been possible to meet the demand of Taipei's rapidly growing population during the summer season. While the danger to health should not be exaggerated (reported water-borne disease rates have been low /see Annex 147, and there have been no epidemics in Taipei for at least 15 years) the pressure in the distribution system has from time to time fallen to a level where there is a risk of contamination. The steady rise in demand appears to have been unaffected by an increase of 70% in water rates in 1959. In order to avoid the chronic necessity for patchwork and improvised measures and to keep up with demand, the water supply facilities should be expanded, in accordance with a plan designed to meet the expected demand a number of years hence. 62. At the same time, there are almost 200,000 people living in the suburbs who depend for their water today almost entirely on untreated supplies drawn by hand from shallow wells, streams and canals. The communities in which they live have requested that the Taipei Water Works provide them with service. In order to do this, and to serve the increase of population in the city and suburbs, estimated on conservative assumptions at about 300,000 during the next ten years, an extensive expansion of the water distribution system is needed. 63. The system can now supply, on an annual basis in the area served, a substantially greater amount of water than is needed for the bare necessi- ties of life. It has failed, however, to meet demands in the summer season of peak consumption. Unless the supply and distribution system is expanded, the amount of water available for each inhabitant of the city will decrease each year as the population grows, and the summer shortages will become pro- gressively more serious. The consequent fall in pressure will increase the risk of pollution, threatening the health and the well-being of the popula- tion. 64. Industrial use of the water produced by the Taipei Water Works amounted to less than 1% in 1960, because industry (except small-scale in- dustry) can provide its own water supply more economically. Larger industries are not expected to benefit substantially from this project. However, there are of course a multitude of small-scale industrial and commercial establish- ments in the town (laundries, bakeries, restaurants, etc.). As a standard of living rises, this type of demand can be expected to increase at a fast rate. In addition, there are important institutional consumers, such as hospitals, schools and colleges. The various agencies of Government also require a large supply of water; among them they consume about 10% of the total supply. 65. The project as presented in this report is based on conservative demands of future needs, and has been considerably reduced in scope during investigation in order to achieve maximum economy. Only a small increase in consumption per head is provided. The rates to be charged after this project has been carried out should provide adequate revenue to cover not only opera- ting and fixed costs and the costs of normal extension of the distribution system, but also a reasonable contribution towards the cost of future major expansions. This level of revenue should represent a reasonable return on total investment. Since the rates charged for water will approximate its cost, the economic use of water should be assured and waste will be discouraged. - 16 - VII. CONCLUSIONS AND RECOMMENDATIONS 66. There is a need for an expanded water supply system in the Taipei region to provide more water for present users, to furnish public water to areas hitherto not served, and to provide for growth in demand over the next nine years. 67. The Taipei Water Works and the Taipei Municipal Council have agreed to charge adequate rates for water to insure generation of funds to cover operating costs, debt service, normal extension expenditures and a portion of major expansion costs in the future, to charge adequate rates for water meters and to encourage prompt payment of accounts by an incentive. 68. The Government of The Republic of China has agreed that it will make available or arrange for others to make available the local currency needed for the project in the form of a long-term loan, on terms satisfactory to the Association. 69. The project provides a suitable basis for an IDA development credit of US$4.4 million to The Republic of China free of interest for 50 years, with no repayments during the first 10 years and repayments of 1% of prin- cipal each of the next 10 years and 3% of principal each year for the last 30 years. There would be a service charge of 3/4% per year on the amount outstanding. The Republic of China would make the equivalent of these funds available to the Taipei Water Works on terms satisfactory to IDA. A loan for a total of 23 years, including a three-year grace period, at an interest rate of 12% with interest and principal repayable in local currency in equal instalments is planned. These terms would be appropriate to the circum- stances of the project. August 28, 1961 TAIPEI REGIONAL WATER SUPPLY PROJECT TAIPEI WATER WORKS ORGANIZATION Director Secretary Chief Engineer (1) (2) Security Office Personnel Office Accounting Office Supply Division Chief Chief Chief Chief (2) (8) (16) (20) Engineering Division Business Division Service Division Leakage Survey General Affairs Divisio Chief Chief Chief Chief Chief (283) (199) (103) (113) (34) Note: Numbers in brackets signify personnel in division or office. TAIPEI REGIONAL WATER SUPPLY PROJECT TAIPEI REGIONAL WATER SUPPLY COMMISSION ORGANIZATION Chairman (Mayor of Taipei) 2 Deputy Chairmen (Magistrate of Taipei Hsien) (Director of Yang-Ming-Shan Administration) Chief Secretary Chief Engineer 2 Secretaries 3 Assistant Chief Engineers Personnel Accounting Office Finance Section Supply Section Clerk Chief Chief Chief ()(5) (4) (4) General Affairs Section Construction Dept. Design Section Chief Chief Chief (9) (52) (9) Note: Numbers in brackets signify personnel in department or section. L- >-4 TAIPEI REGIONAL WATER SUPPLY PROJECT TAIPEI WATER WORKS Summary of Comparative Balance Sheets (NT$ million) Year ending December 31, 1957 1958 1959 1960 1961 Februarv 25, ASSETS Current Assets Cash and Bank Balances 0.3 0.7 2.9 1.3 0.8 Accounts Receivable 0.6 1.0 2.2 3.0 4.7 Less: Reserve for Bad Debts - 0.6 (0j) 0.9 (0) 2.1 (0.1) 2.9 (0.1) 4.6 Other Receivables, Notes & Advances 0.1 2.1 0.6 0.7 0.9 Inventories and Prepaid Materials 5.0 6.1 11.0 10.2 12.4 Other 04 0.4 - 0.3 Total Current Assets 6.5 10.2 16.6 15.4 19.0 Fixed Assets Land 0.4 0.4 16.0 16.0 16.0 Bldgs., Mach.. & Equip. - Water Supply 117.3 123.5 317.3 323.4 332.2 Less: Depreciation i22.2) 95.1 J5J5) 98.0 (112.7) 204.6 (119.2) 203.7 (1 ) 211.4 Meters, Transrort, Misc. 11.0 13.9 26.8 30.0 30.2 less: Depreciation .9) 6.1 (6.0) 7.9 (14.9) 11.9 (16.9) 13.1 (17.1) 12.9 Construction-in-progress 1.2 1.4 29.6 222 Total Fixed Assets 102.8 107.7 238.2 262.4 262.5 Other Assets 0.7 0.7 0.8 1.0 1.0 TOTAL ASSETS 110.0 _P 6 27_ LIABILITIES & EQUITY Current Liabilities Accounts Payable and Advances 1.0 1.6 6.8 3.7 3.3 Short-term Loans 3.8 7.2 4.1 6.4 6.6 Debt Maturing within year __- 2 Total Current Liabilities 4.8 8.8 10.9 13.8 13.4 Lone-Term Loans - - - 3.9 3.9 Other Liabilities - 0.1 - 0.6 0.6 Equit Capital 63.6 63.0 63.0 63.0 63.0 Reappraisal Surplus - - 123.1 123.1 123.1 Contributed Surplus 20.8 21.4 21.7 22.8 23.2 Earned Surplus 20.8 51.6 Total Equity 105.2 1097 244.7 260.5 ii4. TOTAL LIABILITIES & EQUITY UO0O 118 6 25d.6 Ratios: Current Assets:Current Liabilities 1.35 1.16 1.52 1.11 1.41 Debt/Equity - - 1/99 1/99 TAIPEI REGIONAL WATER SUPPLY PROJECT TAIPEI WATER \,ORKS Summary of Comparative Income Statements (in NT$ million) 1957 1958 1959 1960 Water Production (million cubic meters) 43.1 49.3 59.3 65.3 Water Sales (million cubic meters) 26.2 30.0 35.5 39.5 Average Water Rate (NT$/cu.m.) 0.65 0.65 0.95 1.10 Revenue from Water Sales 16.9 19.7 34.1 42.9 Less: Operating Cost: Water Productioni/ 5.1 7.0 10.6 13.9 Distribution -' 3.3 3.7 5.4 7.3 Selling and Business Ex nse l/ 2.0 2.7 3.4 4.2 Administrative Expense - 1.L 1-( 2.0 2.5 11.8 15.0 21.4 27.9 Operating Profit - Water Activities 5.1 4.7 12.7 15.0 Other Activity Revenues / 4.1 6.7 8.2 9.8 Less: Associated Expenses (5.3) (6.5) (9.4) (10.9) Net Gain or (loss) from Other Activities (1.2) 0.2 (1.2) (1.1) Operating Profit 3.9 4.9 11.5 13.9 Non-Operating Income 0.3 0.2 1.0 2.3 Non-Operating Charges (0.4) (0.5) (0.9) (1.5) Net Non-Operating Income (0.1) (0.3) 0.1 0.8 Net Profit 3.8 4.6 11.6 14.7 Note: Wholesale Price Index (1953 = 100) 141 143 159 181 1/ Including depreciation. 2/ Water meter rental fees, service connection design, installation and repair charges, sale of power from small hydro plant, fines and reconnection charges. ANNEX 5 TAIPEI REGIONAL WATER SUPPLY PROJECT TAIPEI WATER WCRKS Capital Expenditures 1953-1960 Water Source and Treatment Distribution System Year Project Amount PiDelines a/ Amount Total (NT$100s) meters) (NT'OOOs) (NW$'000s) 1953 Hain-tien-chi plant pump intake 156 15,988 3,134 3,290 1954 Hsin-tien-chi plant pump intake and motor replacement 137 22,398 7,286 7,423 1955 Chemical Feeders 355 17,647 5,135 5,490 1956 New Shuang-chi plant 1,288 6,846 1,855 3,143 1957 New Shuang-chi plant and 4 new deep wells 23,801 13,972 4,835 28,636 1958 5 new deep wells 2,031 4,951 & 2,713 4,744 5 booster stations 1959 11 new deep wells 6,997 26,7751/& 2,625h/ 9,6221/ 1 booster station 1960 4 new deep wells 2,366 28,40012/ 3,084/ 5,450 Total 37,131 30,6672/ 67 798,h/ a/ Over 75 mm diameter. b/ Not including distribution lines completed but not yet capitalized as at December 31, 1960 with a total cost of approximately NT$17 million. These expenditures were partially financed (NT$7 million) by an ICA counterpart funds loan. Note: These expenditures were financed mainly by retained earnings and depreciation allowances. The only substantial contribution to the Water Works was made in 1957 when the city of Taipei contributed NT$15,469,229 for the new Shuang-chi plant. TAIPEI REGIONAL WATER SUPPLY PROJECT CITY OF TAIPEI Water Usage 5tatistics Water Production Water Consumption - metered Metered Consumption Year end Water Productio Water Consumption Year Annual _Annuale a as % of Production Ppulation r caita Meted apita .. Fcu . (cu.m.thousana) (lp0s)dcd million) thousand) million) 1946 18.8 51.4 - - - 271.8 189 1947 22.2 60.8 - - - 326.6 186 1948 22.8 62.3 - - - 379.4 164 1949 23.3 63.7 - - - 484.3 132 1950 26.9 73.7 - - - 503.5 146 1951 27.4 74.9 13.4 36.8 49 562.8 133 65 1952 33.3 91.0 16.1 44.1 49 585.5 155 75 1953 35.3 96.8 19.6 53.7 55 628.7 154 85 1954 35.0 95.9 22.0 60.2 63 667.2 144 90 1955 35.5 97.2 22.2 60.8 63. 704.1 138 86 1956 36.8 100.5 22.9 62.8 63 748.5 134 84 1957 43.1 118.1 26.2 71.6 61 777.5 152 92 1958 49.3 135.2 30.0 82.1 61 813.8 166 101 1959 59.3 162.5 35.5 97.4 60 854.1 190 114 1960 65.3 178.3 39.5 108.2 61 898.7 198 120 Water Consump- Estimated Estimated Pop.Served Water Prod. tion - metered - Actual Population Populatin as % of per capja per capDa Number of Pop.per I/ served perk/ Water Productio Water Consumption Served_1T_ PopulationL/ served- served Connections Connection Connection- per Connection (7000S (lpcd) (lpcd) (F000s) (CM) (CMD) 1946 217 80 238 - n.a. - - - 1947 262 80 233 - n.a. - - - 1948 362 95 172 - 27.2 13.9 13.3 2.29 1949 387 80 165 - 28.3 17.1 13.7 2.25 1950 400 79 184 - 28.4 17.7 14.1 2.60 - 1951 456 81 164 81 29.8 18.9 15.3 2.51 1.23 1952 508 87 179 87 32.7 17.9 15.5 2.78 1.35 1953 558 89 173 96 36.7 17.1 15.2 2.64 1.46 1954 607 91 158 99 43.1 15.5 14.1 2.23 1.40 1955 637 90 153 95 49.2 14.3 12.9 1.98 1.24 1956 662 88 152 95 54.0 13.9 12.3 1.86 1.16 1957 684 88 173 105 58.6 13.3 11.7 2.02 1.22 1958 718 88 188 114 63.8 12.8 11.3 2.12 1.29 1959 745 87 218 131 69.9 12.2 10.7 2.32 1.39 1960 776 86 230 139 76.7 11.7 10.1 2.32 1.41 Notes on Statistical Reliability: a/ Water production is metered and this statistic is believed to be g This suffers in the same manner as reasonably accurate. h/ This suffers in the same manner as b/ Water consumption shown is that metered to consumers. The reliability This suffers in the same manner as b/and fl of this statistic as a measure of water use is questionable, since This statistic should be reasonably reliable for comparative purposes meters are believed to be inaccurate. Actual consumption may be as much k/ This statistic suffers in the same manner as fo as 40% more than this. 1/This statistic should be reasonablyacrt c/ Population data are dete;ainedy registration and exclude military personnel 1 Thisf tinshe se ean a curate - and any other unregister popiation. Ti ufr ntesm anra d] This statistic should be reasonably reliable for any comparative purposes. e/ This suffers in the same manner as b f/ Although these statistics, if accurate, would be the best measure of comparison and have been used by the TRWSC as a basis for water consumption projections, the population served is estimated and this factor is subject to error. TAIPEI REGIONAL WATER SUPPLY PROJECT TAIPEI WATER WORKS Present Taipei Water Rate Structure (effective April 1, 1959 to date, March 1, 1960) Domestic Use1/ Industrial Use / Meter Basic Base Meter Rate for Basic Base Meter Rate for Diameter Quantity Rate Rental Excess Quantity Rate Rental Excess (mm.) c.m./mo NT$mo. RNT/mo. NT$/c.m. c.m./mo NTfmo. N/mo. NT$/c.m. 13 15 11 5 1.20 15 22 5 3.00 20 17 18 8 17 36 8 o 25 20 23 9 20 46 9 40 30 32 18 25 64 18 50 40 45 65 " 40 90 65 75 55 68 95 " 55 136 95 100 70 91 120 70 182 120 150 100 136 180 100 272 180 Note: Military personnel dependents pay 50% of normal charge. Sales amount to about 3% of total by volume. l/ Includes commercial use where water is not a material added to trade Includes commercial use where water is a material added to trade TAIPET REGIONAT, WATNR !U?PLN POJECT TAIPEI WATER WORKS TATPET WATER SUPPLY PROJECT DESCRTPTION Original Proposal vs. Final Project Original Proposal Final Proloct Remarks Raw Water Pumping Station Provide building for three raw water Provide building for five raw water pump; install Providing extra space for additional Pumps; install three pumps with a only three pumps as previously proposed at this time' pumps; facilitates future expansion. total capacity sufficient to serve both old and proposed filtration plants. Raw Water Pipeline Install 1,400 mm, raw water pipeline If 1.800 mm. raw water pipeline may be installed at The larger 1,800 mm. pipeline will provide to serve raw filtration plant 2.5 km. an increAsed cost proportionate to pipe diameter, sufficient capacity for the long-range away, install this one large pipeline which will have planned filtration plant. Installation a greater proportionate capacity now, at this time will eliminate need for an added 1,200 mm. line at greater cost in the future. Water Treatment Plant Install four sets of flocculating, Install two sets of flocculating, settling and The plant originally proposed had a hydraulic settling and filtration units, each filtration units of the same physical size as casacity of 272,000 CMD, and the final plant set to have a hydraulic capacity to originally proposed. Increase hydraulic a capacity of 200,000; the difference in this handle 68,000 GMD of water. capacity to handle 100,000 GMD of water, capacity will be made up by utilizing existing deep wells to meet peak demand loads. This allowed a reduction of one treatment net from the project. The original propoejl was based on a design criteron of 3 GPM/ft of filteri the final plant will be based on a criteria of 4.5 - 5.0 GPM/ft , as success operating filter plants at higher rates has been achieved in recent years. This allowcd a reduction of the second treatment set from the project. Reservoirs Provide a reservoir at Ta-chi and same No change two reservoirs at Wu.fen-pu. Truck Distribution Main Mains totalling 64 km, were included. Mains totalling 45 km. are included. Truck distribution system was simplified in Taipei and Suburbs built-up areas and construction of certain lines in unbuilt-up areas was deferred, Service Mains - Taipei Mains totalling 86 km. were included. Mains totalling 6 km. are included. No change. Service Mains - Suburbs Mains totalling 88 km. were included. Mains totalling 91 km. are included. Some service mains were added to serve built-up areas and certain service mains were enlarged for insurance against the possibility of low water demand estimates, Main Office Building, Included. Deleted, The need for these buildings in the near future Warehouse and Meter was doubtful. To reduce immediate expenditures, Repair Shop and construction was deferred. Branch Office Buildings Improvements at isin-Tien-Chl Included. Deleted. Since this part of the project was a replacement Plant and should he accomplished with self-generated funds and since this work could not be started until the main croject was completed and would postpone final completion six months to a year, it was deleted. New Deep Wells Not included. Included. Imediate installation of addition deep well capacity wili provide water to allow a more gradual build-up of demand. Sales of water will also generate revenues in the interim and will ease the financial strain during project unstruction. Contingencies Not adelquaLe. Included at a rate of 8% of Forcign Exchange Contingencies were increased to cover possible Expenditures and 20% for local currency neglected items and probable increases in expenditures. construction and procurement costs. TAIPEI REGIONAL WATER SUPPLY PROJECT CONSTRUCTION SCHEDULE Name of Job Items & Description Construct on Perid 1961 1962 1963 1964 1. Raw Water Pumping Station a. Raw water pumping station 1. Caissons, Earth Work, Bank Protec- tiQn 2. Building 3. Pumps Equipment & Elec.Installatior b. Raw water pipe line & drain 1. 1,400 mm., 450 mm. R.C.P.Manufact- line uring 2. Pipe Laying 3. Road Repairing 2. Chan-chu-shan Filtration Plant 1. Earth work, Foundations 2. R.C. Work for Settling, Floccultn. and Filtration Basins 3. Clear Water Pumping Station & Service Building 4. Finishing & Decoration for Basins & Buildings 5. Pumping and Elec. Equipment, Pipes Installation 6. Under & Surface Drainage System 7. Roads, Gardening, and Cleaning 3. Distributing System a. Distributing Reservoirs 1. Earth Work 2. 3 sets of Prestressed Concrete Tanks b. Transmission, Distribution & 1. Trunk Distribution Mains in Service Main for the Region Taipei City 2. Service Mains in Taipei City 3. Service Mains in Neighbrg.Towns 4. New Deep Wells 1. Drill & Pump Installation TAIPEI REGIONAL WATER SUPPLY PROJECT Cost Comparison - Original and Final Projects Original Project Original Project Original Project Revised Iroject Revised Project Cost 1960 Cost Estimate March 1961 Cost Estimate March 1961 Cost Estimate Over (+) or U-icr (-) Total Totaf Total Total US$ NT $ Eiv.NT S S$ T $ Euiv.NT US5 NTus Euv.NT$ US$ NT$ Euiv.NT$ (thousands) (millions) (illi1oasy (thousands) (Fillions) millions) (thousands) (millions) millions) (thousonds) (millions) (milliois) Raw Water Pumping Station 125 5.43 10.43 125 6.0 11.0 135 7.0 12. + 10 + 1.0 + 1.L Raw Water Pipe Line and Drain Line 22 13.53 14.41 22 13.8 l.7 30 18.5 19.7 + 8 + 4.7 + 5.0 Chan-Chu-Shan Filtration Plant 913 72.95 109.47 913 80.0 116.5 619 56.0 80.8 - 294 - 24.c - 35.7 Ta-Chi Distributing Reser7oir 56 10.56 12.80 56 11.6 13.9 58 12.1 164. + 2 + 0.5 + 0.5 Wu-Fen-Pu Distributing Reservoir 78 11.54 14.66 78 12.7 15.8 78 12.7 15.8 0 0 0 Trunk Distribution Main in Taipei City 2,203 55.29 143.41 2,459 56.2 154.6 2,102 h7.4 131.5 - 357 - 8.8 - 23.1 Service Mains in Taipei City 213 17.92 ?6.44 412 13.0 29.5 412 13.0 29.5 c 0 0 Service Mains in Neighboring Towns 350 22.37 36.37 521 16.5 37.3 558 17.4 39.7 + 37 + 0.9 + 2.4 Office Building - 4.37 4.37 - 4.8 4.8 - - - 0 - 4.8 - .8 Warehouse and Meter Repair Shop - 2.57 2.57 - 2.8 2.8 - - - O - 2.8 - 2.8 Buildings - 11.12 11.12 - 12.3 12.3 - - - 0 - 12.3 - 12.3 Improvements at Hsin-Tien- Chi Plant - 1.75 1.75 - 1.9 1.9 - - - 0 - 1.9 - 1.9 New Deep Wells - - - - - - 30 1.8 3.C + 30 + 1.8 + 3.0 Contingency - 4.91 4.91 365 46.3 60.9 322 37.6 5o.5 - 43 - 8.7 - 10.4 Total 349 234.31 397.21 4.951 277.9 476.0 4.344 223.5 397.3 - 607 - 54A - 78.7 I-, TAIPEI REGIONAL WATER SUPPLY PROJECT TAT5'EI WATER WORKS PRO FORMA PROfIT & LOSS STATEMENT - in terms of 1961 price levels - (in NT$ '000s) L6 I2L 1962 1963 16 1966 1967 1968 62 Act.) (Est. Water Production (in thousand cu. m.) 65,300 65,500 65,700 65,700 74,200 86,400 98,900) 101,500 104,400 io6,6oo' i08,e00 Water Sales (in thousand cu. m.) 39,500 41,000 41,700 42,500 49,000 57,000 65,300 67,ooo 68,900 70,300 71,8K0 Estimated Connections (average) 74,000 81,000 85,000 89,000 94,000 102,000 112,000 115,000 118,000 121,000 124,000 Average Water Rate (NT$/cu.m.) 1.10 1.06 1.10 1.50 1.90 2.10 1.85 1.85 1.80 1.80 1.75 Water Revenue 42, 900 43,600 45,900 63,700 93,100 119,700 120,800 124,000 124,000 126,500 125,700 Meter Rental Revenue 4,600 5,600 6,8oo 7,100 7,500 8,200 9,000 9,200 9,400 9,700 9,900 Other Revenues 5,200 6,300 6,300 6,30o 6,300 .6,3oo - 6.3oo Total 52,700 55,500 59,000 77,100 106,900 134,200 136,oo 1391500 139,700 142,500 141,900 Operating Costs; Production 13,900 14,800 14,800 14,800 25,800 26,500 27,300 27,800 28,000 28,300 28,500 Distribution 7,300 7,400 7,600 7,600 16,700 17,000 17,500 17,800 18,000 18,300 18,400 Administratin 4,200 4,700 4,700 4,800 4,900 5,400 5,600 5,800 5,900 6,000 6,100 Administration Z,500 2,700 2,700 2,700 2,700 2,900 3,200 3,200 3,200 3,300 3,300 Meter Expenses 5,800 5,700 6,so 7,100 7,500 8,200 9,000 9,200 9,400 9,700 9,900 Other Expenses 5110 6_00 6,100 _6,100 6,100 ..j00 6.100 _6l10 6.100 6.1oo Total 38,800 41,300 42,700 43,100 63,700 66,10o 68,700 69,900 70,600 71,700 72,300 Operating Profit 13,900 14,200 16,300 34,000 43,200 68,100 67,400 69,600 69,100 70,800 69,600 Non-operating Income & Adjustments 2,300 - - - nca uChes(1,100) (900) (200) - (23,800) (47,100) (46,500) (45,700) (44,800) (43,900) (42,700) (400) (200) (200) (200) (200) (200) (200) (200) (200) (200) (200) Total Profit 14,700 13,100 15,900 33,800 19,200 20,800 20,?00 23,700 24,100 26.700 26,700 Return on Total Capital Invested 6% 4% 3% 5% 6% 9% 9% 9% 9% 9% 8% f'Rates are based on the following formulae approved by the Taipei Municipal Council June 28, 1961. The rates provide sufficient funds for financial viability. Year 1963 Years 1964-1970 Operating & Maintenance Costs Operating and Maintenance Costs + Depreciation + Interest on + Depreciation + Interest on Water Rate a Borrowings + Return on Equity Water Rate = Borrowings + Return on Equity Investment (6%) + Taxes + Investment (6f) + Taxes NT$15,000,000 Estimated Water Sales Water sold during last 12 mos. Equity capital, surplus and long-term loans TAIPEI REGIONAL WATF SUPPLY PROJECT TAIPEI WATR WoRKS PRO FORMA BALANCE SHEETS - in terms of 1961 price levels - (NT$ million) As at December 31, 1960 1961 1262 1963 196 1965 1966 196 1968 1969 2Q ASSETS Current Assets Cash & Bank Balances 1.3 2.8 2.9 4.1 4.1 6.4 40 2.9 3.2 3.7 3.5 Accounts Receivable (het) 2.9 2.9 2.9 4.4 5.9 7.0 7.0 7.5 7.5 7.5 715 Other Receivables 0.7 0.7 0.7 1.0 1.0 1,0 1.0 1.0 1.0 1.0 1.0 Inventories 10.2 10.2 10.2 13.0 15.0 15.0 15.0 16.0 16.0 16.0 16.o Other 3 03 9o5 Total 15.4 16, 0' - 0.5 0.5 0.5 0. Total 15.4 16.9 17.0 23.0 26.5 29.9 27.5 27.9 28.2 28.7 28.5 Special contingency 5.0 27.0 30.0 30.0 30,0 30,o 30.0 30.0 30.0 Fixed Assets Land, Plant, etc. 369.4 393.8 404.8 415.8 890.3 913.3 941.3 968.3 993.3 1,018.3 1,043.3 Lesst Depreciation (136.6) (146.5) (157.1) (168.1) (188.7) (209.9) (232.0) (254.7) (277.8) (301-5) (325.6) Construction in Progress _2.6 1 23.5 326.7 - 3-0 -15.2 22 50 61.0 Total 262.4 '20.4 471.2 574.4 701.6 703.4 712.3 720.6 744.5 761.8 778.7 Other Assets 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 TOTAL ASSETS 2 LIABILITIES AND EQUITY Current Liabilities Accounts Payable, etc. ).7 3? 3.? 3.7 3.7 3.7 3.7 3.7 3. 3.7 3.7 Short-term loans 6.4 0.7 - Debt matlaring within year 3.7 -63 7 2- 10.0 11.2 Total 13.8 8.3 37 9.3 10.0 10.7 11. . 13.7 14.9 Long-term Loans I.C.A. 3.9 27.8 80.9 138.9 183.3 180.3 177.0 173.3 169.1 164.4 159.1 1.. '8. 19.5 IZ-1 25. 202.2 12. 194.'3 Ia 18. 178. Total 3-9 55.8 200.4 297.8 388.8 382.5 375.5 367.6 358.7 348.7 337.5 Other Liabilitie4 0.6 0.6 0.6 0.6 18.5 8.5 0.6 0.6 o.6 0.6 o.6 Equity Capital 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 63.0 Surplus i2L 210.6 22. 3 3 3 0 622,2 Total 260.5 273. 289.5 323.3 342.5 363.3 384.0 407.? 431.8 458.5 485.2 TOTAL LIABILITIES & EQUITY 334.2 4 64,3 0.8 8.2 Ratios: Current Assets:Current Liabilities 1.1 2.0 4.6 6.2 2.8 3.0 2.6 2.4 2.2 2.1 1.9 Debt/Equity 1/99 17/83 41/59 48/52 53/47 51/49 49/51 47/53 45/55 43/57 41/59 1 This is available to cQver extraordinary operatirg costs not recovered in revennu through 1963, or project shortfall; if not needed for these items, it may be Used to defray interest during construction. TAIPEI REGIONAL WATER SUPPLY PROJECT TAIPEI WATER WOPKS PROJECTED CASH FLOW STATEMENT - in terms of 1961 price levels - (NT$ '000s) Calendar Year 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 CASH RESOURCES Earnings after Interest & Deprec. 13,100 15,900 33,800 19,200 20,800 20,700 23,700 24,100 26,700 26,700 Depreciation 9,900 10,700 11,000 20,600 21,200 22,100 22,700 23,100 23,700 24,100 Interest 900 200 - 23,800 47,100 46,500 45,700 44,800 43,900 42,700 I.C.A. Loan Drawdown for Project 27,800 53,100 58,000 48,2001/ - - - - - - I.D.A. Loan Drawdown for Project 28,000 91,500 39,400 51,0002/ - - - - - - Total Cash Available 79,700 171,300 142,200 162,800 89,100 89,300 92,100 92,000 94,300 93,500 CASH REQUIREMENTS Project - I.C.A. Financed 27,800 53,100 58,000 48,2001/ - - - - - - I.D.A. Financed 28,000 91,500 39,400 51,0001/ - - - . - - Self Financed: 2' - Land & Eng. 5,300 5,800 5,800 4,200 - - - - - - - Customs Duties - -10000 10,000 7,900 Project Total 61,100 150,400 103,200 113,400 10,000 7,900 - - - - Additions to Special Project Contingency - 5,000 22,000 3,000 - - - -. Provision for 2nd Stage Expansion - - - - - 3,000 12,000 14,000 16,000 16,000 Normal Improvements & Extensions 2,800 5,000 5,000 9,500 15,000 19,000 17,000 15,000 15,000 15,000 Water Meter Purchases 4,000 6,000 6,000 7,000 8,000 9,000 10,000 10,000 10,000 10,000 Additions to Working Capital other than Cash - - 4,800 3,500 1,100 - 1,500 - - - Interest: I.C.A. Loans 700 200 - 11,200 22,200 21,900 21,500 21,100 20,700 20,100 I.D.A. Loans - - - 12,600 24,900 24,600 24,200 23,700 23,200 22,600 Other 200 - - - . . Loan Repayment - I.C.A. Loans 3,700 3,900 - 1,200 2,600 3,000 3,300 3,700 4,200 4,700 I.D.A. Loans - - - 1,400 3,000 3,300 3,700 4,200 4,700 5,300 Other 5,700 700 - - - - - - - Total Cash Required 78,200 171,200 141,000 162,800 86,800 91,700 93,200 91,700 93,800 93,700 Cash at beginning of year 1,300 2,800 2,900 4,100 4,100 6,400 4,000 2,900 3,200 3,700 Cash available less Cash required 1,500 100 1,200 - 2,300 (2,400) (1,100) 300 500 (200) Cash at end of year 2,800 2,900 4,100 4,100 6,400 4,000 2,900 3,200 3,700 3,500 Debt service coverage - - - 2.4 1.7 1.7 1.7 1.7 1.8 1.8 I/ Includes capitalized interest during construction of NT$24.6 million Includes capitalized interest during construction of NT$36.2 million NT$12 million has been invested in land and engineering to December 31, 1960. TAIPEI REGIONAL WATER SUPPLY PROJECT TAIPEI WATER WORKS ANNEX Incidence of Reported Possibly Water Borne Disease Cases Taipei, Taiwan Year Typhoid Dysentery Total Population Disease rate Cases Death Cases Death Cases Death Cases/l,000 persorE 1947 36 12 6 2 42 14 326,646 0.13 1948 59 15 16 5 75 20 379,400 0.20 1949 157 32 12 3 169 35 484,312 0.35 1950 51 9 27 12 78 21 503,450 0.15 1951 52 8 66 4 118 12 562,756 0.21 1952 78 5 19 4 97 9 585,459 0.17 1953 74 4 52 4 126 8 628,748 0.20 1954 81 3 13 1 94 4 667,244 0.15 1955 47 2 11 0 58 2 704,124 0.08 1956 52 3 68 3 120 6 748,510 0.16 1957 92 6 37 2 129 8 777,467 0.17 1958 86 2 22 1 108 3 813,825 0.13 1959 49 0 21 1 70 1 854,061 0.08 1960 61 1 23 0 74 1 898,655 0.08 Note: Information from Health Centers of Taipei City and Taipei Prefecture reveals only that occurrence of typhoid and dysentery in the last years could be traced back to fly contamination rather than the water served from public water system or that collected from wells or surface sources. :-m－엽－뿔－，컨： 丰